SEOUL (Reuters) – Import prices in South Korea accelerated at the fastest pace in five months in December, central bank data showed on Wednesday, signaling renewed inflationary pressures from a weakened local currency.
The import price index, expressed in local currency, rose 7.0% in December from a year earlier, the fastest since last July, according to the Bank of Korea.
It was the second month in a row of increase in import prices, which affect consumer prices over time, after a 2.8% increase in November.
The won ended December down 5.2% against the dollar, its biggest monthly decline in 22 months, after hitting its lowest level since March 2009 due to domestic political turmoil.
Last month, consumer inflation in South Korea accelerated to 1.9%, beating market expectations and close to the BoK’s 2% target, with the central bank signaling the possibility of further acceleration in inflation this month.
The BoK is expected to cut interest rates by a quarter of a percentage point to 2.75% on Thursday, a month earlier than previously expected, to support a struggling economy amid risks from political uncertainty.
The export price index rose 10.7% last month, also the fastest in five months, after rising 7.0% in November.
